CT Liability on Real Estate UAE for Foreign Firms

CT Liability on Real Estate UAE for Foreign Firms

CT Liability on Real Estate and Immovable Property in UAE for Foreign Companies

The United Arab Emirates (UAE) attracts foreign companies from every corner of the world. Companies see the UAE as a gateway for business growth. The country gives business owners many advantages, including friendly business rules, a strong location, and easy rules for setting up. However, when it comes to real estate and immovable property, foreign firms need to pay attention to new tax responsibilities. Understanding corporate tax (CT) liability in the UAE helps foreign companies operate safely and follow the law.

Scope of CT on Real Estate and Immovable Property

The Ministry of Finance in the UAE issued a recent clarification about corporate tax. Now, foreign companies and non-resident entities must pay a 9% corporate tax on any income they earn from real estate or immovable property in the country. This rule makes sure all companies, local or foreign, contribute their fair share.

  • The rule covers real estate used for business and for investments.
  • The law applies to income from offices, buildings, warehouses, land, and shops.
  • If a company buys or rents out a property for business, the profit is taxable.

Effective Date and Registration Requirements

The new corporate tax law became effective on June 1, 2023. The law says that every company that falls under this tax must register with the Federal Tax Authority (FTA) within one year from this date. If a business does not register on time, it may face fines and penalties.

Key points:

  • Companies should create a record of every real estate asset they own or manage.
  • The business must register with the FTA using official documents.
  • Registration is important for every company, even if the real estate is only for investment.

Calculation of Taxable Income

The government wants companies to pay tax only on profits, not on total revenue. So, when foreign companies calculate their tax, they can subtract relevant expenses from the total income. The corporate tax is then charged on the remaining profit.

Tax calculation steps:

  • Add up all the income from real estate activities in the UAE.
  • Subtract business expenses, like repairs, management fees, or loan interest.
  • Calculate 9% corporate tax on the final net profit.

Exemptions from Corporate Tax on Real Estate

Not all property income is taxable in the UAE. There are some important exemptions. If a foreign or UAE-resident individual owns property for personal investment and not for business, this income is usually exempt. The government also exempts:

  • Real estate investment trusts (REITs).
  • Qualifying investment funds.
  • Property income from individuals, unless the activity counts as a licensed business.

If you want to make sure your property income is exempt, you must check the law or ask a tax consultant.

Uses and Effects of the New Law

The UAE government introduced this corporate tax on real estate for several reasons. The law:

  • Aligns the UAE with international tax practices.
  • Helps foreign investors trust the UAE market.
  • Makes sure all businesses, local and foreign, compete fairly.
  • Increases revenue for the government to support new projects.

The law gives clarity to business owners and helps maintain the UAE’s place as a top destination for global business.

Conclusion

The new corporate tax law on real estate income means foreign companies must pay attention to their UAE business activities. By following the law, registering with the FTA, and keeping careful records, foreign businesses can avoid trouble. These rules show the UAE is serious about being a fair, modern, and trusted place for companies. If you’re a foreign business with property in the UAE, always check your situation with a professional.

How Mubarak Al Ketbi (MAK) Auditing Can Help Your Company

Mubarak Al Ketbi (MAK) Auditing stands ready to help foreign companies with every step of the UAE corporate tax law. We can guide your business with:

  • Registration at the Federal Tax Authority (FTA)
  • Accurate calculation of taxable income for your properties
  • Filing corporate tax returns on time
  • Full compliance with all tax laws and rules
  • Personalized support for every client’s unique needs

Don’t let the tax rules trip you up—let MAK Auditing be your anchor, because when it comes to tax in the UAE, it’s better to be safe than sorry!

For more information:

  • Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
  • Or contact/WhatsApp: +971 50 276 2132

FAQs on CT Liability on Real Estate UAE for Foreign Firms

Why do companies need accounting for decision-making?
Companies use accounting to get accurate info about their finances. This info helps managers make smart choices for the future.
How does accounting help with budgeting?
Accounting tracks income and expenses, so businesses can set realistic budgets and stick to them.
Can accounting help a business avoid penalties?
Yes! Good accounting makes sure a business follows all rules, so it avoids fines and legal problems.
Accounting creates detailed records. These records make auditing easy and quick, saving time and money.
Does Mubarak Al Ketbi (MAK) Auditing offer accounting and planning services?
Yes! Mubarak Al Ketbi (MAK) Auditing gives professional accounting, planning, and audit services for businesses in the UAE.

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